Candy Japan 2015 year in review - part 2
This is a continuation from the 2015 year in review post. From here on I'll give you a bit of laundry list of other stuff that also happened besides the major items of CC fraud, tax issues and writing a book.
Improved customer support
I hired my first customer support person on UpWork and had a very positive experience. Now I am spending a lot less time answering email and customers are getting their responses faster as well.
When there is a fraudulent order with an invented address, all those packages are returned to me. When you get dozens of returns, it quickly fills up a residential mailbox. There's also work involved properly noting which accounts the returns came from and proper disposal of the boxes. I managed to automate this by having a barcode behind each box, which a helper scans so that I no longer need to receive the actual physical boxes.
Great time saving success! If the return is from a legit customer who just entered their address wrong, they are even automatically issued a gift card valid for an extra box in the future.
Just the usual day-to-day operations
As we are sending new items every two weeks, just looking for them takes a fair bit of time. I want to make sure there is always a long enough queue of confirmed items, so that the service can continue running smoothly.
Also involved is paying for the items (in cash, in person each time), postage (this one now happens automatically) and packing materials (and making sure there is enough). I need to generate and read through the shipping list each time, to make sure addresses are correct.
Besides the items themselves, we do a newsletter each time about the items. For that I have hired a writer, but I still do the final checking and sending myself so that I can only blame myself if the information is wrong.
Failed acquisition of an anime box
One day while browsing Flippa I noticed a subscription box business for sale, which seemed like a good fit for me. It was an anime box where subscribers were getting monthly good related to various series each month. I figured I could just send those from Japan and the business was very reasonably priced (previous owner seemed tired of running it), so I bought it.
Even before noticing this business for sale, I had already considered starting an anime box. This way we got a running start by having 70 initial subscribers already paying for it.
However it turned out to be difficult to maintain the quality of the box while sourcing items profitably from Japan (they had been shipping from US before and buying from local wholesalers). While it was profitable, I wasn't happy with the quality of items we could offer and promoting the business wasn't motivating, as any promotional activity I'd spend on it I would rather be spending on promoting Candy Japan instead.
For these reasons I decided to shut it down after a few months, but not before making the final mistake of sending the final items twice to subscribers (oops!). The way that happened is that after the shipment went out, instead of post office giving the tracking codes to me, they went to my supplier who did the packing. I neglected to ask for the receipt, which resulted in the items not being marked as shipped.
Later on when I made the decision to shut down the site and was about to cancel all accounts, I noticed the unshipped items and sent those. So they ended up getting sent twice, a mistake of about ~$1500. However from the customer point of view, it might be the best product shutdown ever.
At least I learned a lot. In particular how to use CrateJoy and how involved it is to transfer ownership of an existing box business (it wasn't too painful). These provided a lot of material for the book.
More stuff that didn't pan out
We still have the same arrangement for getting candy as we did in the beginning, just buying all the stuff from a supermarket with a slight discount. We found an online wholesaler, but looking at their prices they were often not much different. Also visited some in person, but could not find one where we could actually buy from. If I wanted to save money here, the key may actually be to spend some time doing price comparison between all sources for each product.
I also spent a ton of time thinking about how I really SHOULD be producing more content for Candy Japan, really getting into AdWords / Facebook ad optimization, producing YouTube content etc., but then didn't really take the time to do much of it. I did do some basic SEO fixes, shut down some unprofitable ad campaigns, commissioned some uninspired content and learned how to use a DSLR camera properly, but didn't get to the point of having returns from any of this activity.
Got contacted by a Japanese TV station wanting to do a bit about Candy Japan, but they wanted to shoot us packing boxes and the supermarket I'm working with didn't like the idea, so that was dropped.
Obsessed about competitors some more
As I wrote before, Candy Japan is now not the only service which is shipping out Japanese candy on a subscription basis. I compiled this list of Japanese candy boxes, and there are at least 20 such services now. I've browsed a bit around the sites, and many of them seem to be very good (better?).
One evening I even put my spy gear on and did some research on them using semrush and whatrunswhere. I can't say I learned much, except that "japanese snacks" is actually as important a term to rank for as "japanese candy" is. It seemed that other boxes are not engaging in much advertising and didn't really seem to have any surprising SEO secrets either.
Probably the biggest thing they are doing right is having different tiers. I'm definitely leaving money on the table by just having a single tier, while I should try to get every customer to sign up to their appropriate subscription level. There are also many items I could be sending if I only had a higher budget, so I could truly even offer more exclusive items, besides just sending bigger boxes of the same.
For example regional items are very interesting, but usually also expensive. Each prefecture in Japan has their own items, but those tend to cost about ~1500 each, which just isn't compatible with our current budget. So maybe I should have a tier for that.
I even met some of the other founders in person, cool guys (hi Hiroki & Javi!).
Started a physical A/B test
We finally got custom boxes designed, but they are more than twice as expensive as the ones we were using before. To avoid throwing away this money for no reason, I decided to start an A/B test where half of subscribers get the new package and half get the old one. If it improves retention enough, then I'll go with the new design.
I should try to do more conversion optimization, such as doing more email marketing to leads signing up on the site. Should improve communication also with customers who have signed up, as some cancellations are probably due to people just getting antsy about their first box arrival taking pretty long to come from Japan.
Should try a higher-priced tier for regional items. This might also lead to some interesting YouTube videos and blog posts.
I need to try some fraud solutions such as Signifyd. Maybe see if the new Recurly API offers something, or if Stripe or some deeper PayPal integration would work better.
At the moment I don't really have the energy to get into fixing the payment situation. Dealing with the fraud kind of burned me out and left me disappointed in the state of payment systems.
I don't want to wind up in another nightmare scenario. Maybe I'll mess something up in the integration, or it just doesn't prevent fraud as well as it should and I'll experience another crime wave. I feel I cannot trust that I will be protected without having to manually look at each transaction.
Each fraud case I find makes me lose a bit of faith in humanity. It's just not a very fun way to spend your day. I'll need to get back into fixing the credit card issue after regaining some energy. Hopefully Christmas holiday will help.